Developing clean energy sources is critical for the future of the United States and the rest of the world. However, creating the technology needed to make clean energy is expensive.
The Department of Energy’s (DOE) Loan Programs Office (LPO) is a program that helps facilitate the development of new technology by offering loans and loan guarantees under three different programs. Learn how the DOE’s Loan Programs office works to finance large-scale energy infrastructure projects.
Key Takeaways
- The Department of Energy’s Loan Programs Office was created in 2005.
- The LPO offers loans and guarantees for developing clean energy projects.
- Three loan programs are available through the DOE Loan Programs office: Innovative Clean Energy, Advanced Technology Vehicles Manufacturing, and Tribal Energy Loan Guarantee Program.
- Tesla and Ford have used DOE loans to further their electric vehicle initiatives.
History of the Loan Programs Office
The U.S. Department of Energy’s Loan Programs Office was created in 2005 when the Energy Policy Act of 2005 was signed into law. The LPO grants loans and loan guarantees for large-scale energy infrastructure projects aiming to develop more fuel-efficient products or clean energy, such as for solar, wind, or hydroelectric power.
Since its inception in 2005, the LPO has granted more than $30 billion in loans, with more than $13 billion repaid principal and $4 billion earned in interest. Projects funded have created 37,000 jobs, lowered CO2 emissions by 40 million tonnes, and eliminated the need for 19.2 billion gallons of gasoline.
The LPO aims to support technology that isn’t yet widely available or that hasn’t found a commercial market yet to help them find commercial viability. The office’s Outreach and Business Development Division helps create support teams across all aspects of business development for the approved projects. Once the loan is closed, the Portfolio Management Division works with the Technical and Project Management Division to keep projects on track to meet goals and eventually repay their debt.
In addition to the administrative support, The U.S. Department of Energy LPO provides loans at competitive interest rates. For example, the Advanced Technology Vehicles Manufacturing Loan Program (ATVM) offer interest rates on par with the U.S. Treasury Rate with no credit spread.
DOE Loan Programs Office (LPO) Loan Programs
The LPO primarily oversees three loan programs: Innovative Clean Energy (Title 17), Advanced Technology Vehicles Manufacturing (ATVM), and Tribal Energy Loan Guarantee Program (TELOP).
- Innovative Clean Energy (Title 17): These projects focus on clean energy infrastructure developments such as nuclear, solar, wind, geothermal, and biofuels.
- Advanced Technology Vehicles Manufacturing (ATVM): ATVM projects focus on auto manufacturing projects such as light-duty electric vehicles or other alternative fuel sources for transportation.
- Tribal Energy Loan Guarantee Program (TELGP): This program provides direct loans or partial loan guarantees for any energy-related project undertaken by a federally recognized tribe, Alaska Native village, or Tribal Energy Development Organization.
Examples of LPO Loan Success Stories
One notable success story from the LPO is Tesla Inc. (TSLA). Tesla received a $465 million loan in 2010 to develop the Model S. Tesla repaid the loan in full in 2013. The funds distributed through the ATVM loan created 1,500 permanent jobs and saved 52,000 metric tons of CO2 emissions.
In another example, Blue Mountain Energy, a solar energy equipment supplier, used a $98.5 million partial loan guarantee to establish a geothermal power plant in northern Nevada. The plant uses binary cycle geothermal technology to convert medium-temperature geothermal heat into energy using a hot ‘brine’ liquid extracted from a subterranean geothermal reservoir.
The Blue Mountain Energy project created 200 construction jobs, bought from more than 300 regional suppliers and will create 14 permanent jobs. The geothermal energy harvested will prevent 130,000 metric tons of CO2 emissions annually by generating 240,000 MWh annually.
Are Loans Available to Established Companies?
The LPO focuses on extending loans to companies that are pioneering techniques to create new forms of clean energy. Established companies may apply, but the project would need to meet the goals of the program. Notably, Ford Motor Company received an ATVM loan for $5.9 billion to upgrade their manufacturing plants in 13 cities to use fuel-efficient technology and create hybrid, plug-in hybrid, and all-electric plug-in vehicles.
How Much Capital Is Available Through the Loan Programs Office?
The LPO had over $40 billion in loans and loan guarantees across three programs as of August 2022. The three programs are Innovative Clean Energy (Title 17), Advanced Technology Vehicles Manufacturing (ATVM), and Tribal Energy Loan Guarantee Program (TELOP)
Can I Apply for a Loan Through the LPO to Put Solar Panels on my House?
Homeowners cannot apply for loans through the U.S. DOE’s LPO because it only handles large-scale clean energy projects. Other government programs are available for residential projects, which you can find on the Department of Energy’s website, energy.gov.
What is a DOE loan?
A DOE loan is a loan from the U.S. Department of Energy (DOE). They are generally available to companies that meet certain requirements set by the department’s various loan programs. They are available to companies developing large-scale energy-related projects like electric vehicles or solar panels.
The Bottom Line
The Department of Energy’s Loan Programs Office offers programs that can significantly impact the viability of clean energy projects. With billions of dollars to lend and multi-industry administrative support, the office provides more than just capital. It provides guidance and support needed to take an idea to fruition.
Because of its multi-pronged approach, the office has an excellent success rate and has bolstered new initiatives, created jobs, and saved carbon emissions on a mass scale.